Tuesday, March 23, 2010

Spring is the season for applying for scholarships and deadlines are rapidly approaching. Here is some info on two credit union scholarships that any credit union member who is a student should consider.

But first a word about taxes. The FAFSA (Free Application For Student Aid) requires tax/income information. So, parents, you should not slack off and wait until the eve of April 15th to do your taxes. Many scholarship applications require a copy of the FAFSA. College financial aid office deadlines for FAFSA applications may be much later, but many scholarships deadlines are in March.

And students, Yes, applying for scholarships is not fun, but it may be the most anyone will ever pay you to write an essay. It won't hurt.

So here are two credit union scholarships for you:

Coors Credit Union Scholarship

Our scholarship program (available to high school seniors and undergraduate students) awards two (2) $1,000 scholarships to student members of the credit union who demonstrate a caring spirit and appreciation for others

Scholarship applicant must be:• A member in good standing with Coors Credit Union.• A graduating senior or current college student• Accepted as an incoming freshman or already attending a college, university, trade or craft school.

Deadline To Apply

Application and supporting documents must be received together by March 31, 2010.

Notice of Awards

Winners will be notified by May 14, 2010.

Braymen-Beach Scholarship

Offered by Board of Directors of the Credit Union Foundation of Colorado and Wyoming. One $5,000 scholarship award will be given to a student seeking a business degree from a four-year accredited institution, who is a member of a credit union affiliated with the Credit Union Association of Colorado. The deadline for applications is Tuesday, March 31, 2010.

Tuesday, March 16, 2010

Popken got the low down on the auto car sales game of Four Square straight from a used car salesman. I know I've played in this game without realizing it and by passing this to you I'm exposing it for more to see. Following is most (not the entire) of the Consumerist post, I give them total credit for the whole thing, and didn't want to risk that you miss it. Before we get on to the game, I have to tell you The Consumerist's NO. 1 defense against getting the bad end of a car sale and that is "GET YOUR FINANCING THROUGH THE CREDIT UNION BEFORE YOU EVEN STEP ON TO THE LOT." And now onto the game...

HERE'S HOW THE FOUR-SQUARE WORKS:

The "worksheet" (or four-square, as it's called) is the first thing a person will see when they sit down to negotiate a car's price. This sheet is used both in used and new car sales. When the interested party sits down, they've already driven the car, and have talked to the salesman about what they're looking for. The salesman has had the trade evaluated, if there is one, and has gotten the customers something to drink to take the edge off.

After sitting everyone down, the salesperson starts filing out the four-square. A blank one looks something like this:

The salesman will only put down the make, model, VIN and customers information (not pictured). Then, the salesman will have the customer initial the part that says "I will buy today if numbers are agreeable to both parties." If there's any resistance (which normally there isn't), the salesman simply says that its to make sure that the customer really is ready to drive the car off the lot today - IF they can get the numbers right. I never had anyone not sign the form who was actually willing to buy the car today. By doing this, you have shown your commitment to the manager in the tower (tower: back room, usually behind glass, where the salesman goes to confer with his manager.)

(A note about the tower: This is where the deal actually takes place. The salesman you are dealing with is NOT who you are negotiating with - the sales manager, who sits behind a desk (and is usually one of the scummiest people you'll ever meet) is who's actually going to be haggling with you. This will not happen in front of you, nor will you see what is actually happening. It's a bit of theatre, this part.)

The salesman will then take the paper up to the tower, and when he returns, you'll see something like this:

The salesman will start, very matter-of-fact, going over the numbers with you. First, he'll start with the value of your trade.

The value of your trade, as listed, is $3000. You, expecting at least 5k for your beater, are unhappy with the number. That's fine, the salesman says. We'll get to that in a moment. He then goes on, very quickly, to just state the price of the car. Salespeople are instructed to move over these parts of the sheet VERY QUICKLY, as you'll see in a moment.

Next, he arrives at the down payment square, which is easily double what you'd hoped to put down today on the nice new Prius you now want very badly. Lastly, he arrives at the monthly payment. "That payment is outrageous! I can't afford that!" is what you're probably thinking. All in all, these are pretty crap numbers from what you see.

THESE NUMBERS ARE MEANT TO INSULT YOU AND PUT YOU ON THE DEFENSIVE, ESPECIALLY THE LAST TWO. The idea here is that, unless you're really observant, to get you less concerned about the overall price of the car and what your trade is worth (we'll go into trade manipulation in a moment), and get you to the payment plans offered at the bottom. The salesman, who knows you are steamed, will keep on acting like nothing is wrong, and hand you a pen to sign by the X. This is done for two reasons - 1)You might be the biggest, dumbest sucker we've had today and actually agree to these terms (happened twice the three months I did this), or 2) You look like the aggressor when you say you won't sign.

When you decide state that those numbers don't work for you, the salesman will ask which numbers you have a problem with. Most people will go straight to the down payment, as that's usually the part that most people gag on, followed closely by the trade in value. The salesman will then either talk about your trade (and proceed to downplay the car as much as they can - that's usually pretty easy), or will go directly to the down payment. Very discreetly, the salesman will fold the four square so that the only figures you see when you're talking are the down payment and monthly payment.

The salesman will then say "Well, what were you thinking about putting down today on the car?" You'll respond something like 1500, 1000 or even less if you're in a bind and NEED the car but are broke. The salesman will nod, and act as if he's empathetic with your plight - those bastards up in the tower *are* asking too much from you! He'll then cross out the down payment number and write in the number you're looking for.

At this point, the salesman will say something to the effect of, "Well, we may be able to get that down payment done for you. But, as I'm sure you know, the less you put down today, the more you'll have to pay off on the car - so this payment is likely to go up. What were you looking to pay on the car for payments?" You respond, "I didn't plan on paying that much, must less more!" The salesman will pause, hoping that his last line will sink in a bit and you'll either acquiesce to the current number or offer something higher.

If you don't, and insist that you were only planning on paying $300 a month for the car, the salesman will say, "I don't think I can do this, I really don't. But, I tell you what; my manager is crazy today and hasn't sold that many cars - he's really under the gun from upper management to get some cars out today, and he might just do this. Tell you what - if I can get these numbers, would you buy the car right now?" You say, "Well, sure, I guess." The salesman will say, "Okay, can you write me a check for the down payment so I can take it up there? They're not usually willing to turn down someone if I show up with cash in hand!" (Real reason? People are really unwilling, for some reason, to ask for a check back later if negotiations start to break down.)

Most people, at this point, will write the check - if the salesman is good enough with the snow job, people will honestly think that they're getting a good deal and that they need to do everything they can to get the manager to cave and sell them the car for next to nothing. The salesman will also get you to sign the form, by the X, saying that you're agreeing to the new numbers, not the old. He'll then put on his "wish me luck" face, and trudge up to the tower to haggle with his boss, the mean ol' manager.

(A note about the X: There's nothing legally binding here, BTW. You could sign your SSN, your blood type, and your name all on that line - but there's nothing binding on either party to make that happen. It's a precursor to the real deal with all the lovely paperwork in finance...but not the actual deal. However, the dealerships make you do this so you'll think its official and leverage yourself into thinking you may have just bought a car.)

The salesman will return, with a huge grin on his face, and something like this:

He'll say, "Wow! He really is in a tough spot! He was willing to let this go for the down payment you wanted! But, like I was saying, he couldn't really hit the payment you were looking for because he went down so far on the down payment, and he can let it go for this. (Motions towards new payment offer.) Would this work for you?" You will sit and look at the number, and wish you weren't buying a car today but instead on vacation. You will either agree, and we'll enter the final turn, or you'll go another couple of rounds with them until they either meet you somewhere in the middle, or you start to walk out.

(Note about "walking out." This doesn't work if your offer is, truly, unrealistic. You need to do your homework before going in - this includes finding out how long the car has been on the lot [just driving by and seeing it for a couple of weeks is good ammo], what the going rate is for those cars, and above all else, securing your financing before you get there, so you're more worried about the ACTUAL PRICE OF THE CAR instead of these bullshit terms.)

Now, lets say you've got a problem with the trade price, as well as the other figures (other than price.) The salesman (and manager) will probably agree to whatever price you want for your trade, within reason. So, assume the sticking point is that you want $5,000 for your trade - that's fine, we'll just say it's going to be bought for $5000. We simply move around the price of the car to $2,000 more, and you're in the clear. You don't notice, we don't say anything, and you feel happy. This is the way that dealerships do the whole "push pull or drag" sales where they'll give you $5,000 for an engine block.

So, at this point, we'll assume that you've gotten everything square and you're ready to close the deal. Sometimes, if the manager feels especially nasty (or has gone a few rounds with you via the worksheet), they'll come out of the tower and say "Folks, I'm (Douchey McDouchebag), the sales manager here. Congratulations! You've just bought a car! We were able to get the payments to $310 - I know you wanted $300, but that was the best we could do. That's close enough, right?" They'll nod their head (another psychological trick to get you to agree), and almost every time the person says "Yea, that's fine!" The problem is, they didn't realize that a $10 payment bump over a 5-year loan nets an extra $1k in profit for the dealership. It's called "the $10 (or $15, or $20) close", and I only saw it fail when a person was really, really exasperated with us. The deal ends, and you wake up in a year realizing that, somehow, you're $6,000 upside down on your car, while the dealership is laughing all the way to the bank.

So, those are the major pitfalls associated with the four-square; it looks really unassuming on its face, but its designed to make you pay more, and not realize what's going on. The manager, during negotiations, will write in BIG BIG letters, will turn over the sheet if he needs room, and will write over other things in order to make it as confusing and hard to deal with as possible in attempts to wear you down and make you sign.

The saying we used to have around the lot was "It's like the Dallas Cowboys playing a Pee-wee Football team." The average car salesman does this dance 4 times a day - you do it once every 3-5 years. They are better, and they will get you on some level. However, by doing stuff like this, you can control how much it happens.

Here's what a finished four-square might look like:

Remember, The Consumerist's advice: GET YOUR FINANCING THROUGH THE CREDIT UNION BEFORE YOU EVEN STEP FOOT INTO THE LOT.

Coors Credit Union has a great reputation for affordable and honest car loans. You get the same great rate for new or used cars and you don't even need to know how any playground games.

Tuesday, March 9, 2010

There's once piece of financial advices that always causes me to wonder, "huh?" So many personal finance advice experts always say that you should pay extra or even double on your monthly mortgage payment with the intent of paying it down faster.

I never understand this advice for two reasons. First, if you are struggling with debt, your mortgage is likely to be the lowest interest loan that you have. Your efforts would be better allocated toward eliminating high-interest debt. And second, the interest that you pay on your mortgage loan is tax-deductible. The interest on credit cards and car loans are not tax-deductible.

Ron LoSasso, mortgage consultant at Coors Credit Union, put it like this: "I am not a fan of prepaying the home loan as once that is made the only way to get that money back is to refinance the loan, obtain a home equity line of credit or sell the house."

This is an excellent point. On average most people sell their house 7-10 years. The time spent in a house increases as we get older, but generally speaking we like to move around. There are probably dozens of better ways to use that cash.

Maybe this debt strategy myth of that paying more on your mortgage is a might make sense for somebody, but in my opinion this MYTH is BUSTED.

Tuesday, March 2, 2010

Two things that seem to power the world (depending on your perspective) are the two things that we have such a hard time talking about: love and money. Actually we talk about both of these a lot, but often not in a way that gives any meaningful information. This blog isn't about your love life, so I'm going to avoid that topic (perhaps just to prove my point). But, on the topic of money, we're really just beginning to open up.

So many of us have hangups, wherever their basis come from, around money. Mostly this can be blamed on our parents who never talked about money. Which probably comes from their parents not talking about money. Which probably stems from the depression era when parents did want to upset their kids, so they didn't talk about money. I'm not sure how far this tradition of not talking about money goes, but it's gone on long enough.

The typical reason we hold our realities about our personal finances so tightly is because we don't want others to know how little we actually understand money. But the thing is the more we wear the mask of "I'm OK" the worse our problems get.

Since their inception, credit unions have made it their mission to help people conquer their money fears. Without judgement, lecturing or incredulousness credit unions make themselves available to dig people out of financial messes, straighten out unruly record keeping, and just general show people how to effectively manage their money. Over the years, however, this invaluable service has been flying under the radar and only a few people take advantage of it. But this past year has been a veritable perfect storm of an unsympathetic economy.

That's where Coors Credit Union's RedSide Solutions program comes in. Don't let the officialness of the title fool you. RedSide Solutions is all about that traditional Credit Union spirit of people helping people. It's designed to get your personal finances on track no matter how close you've stayed or how far you've wandered from the path. It's about making you successful.

So here's a sampling of what RedSide Solutions can do for you:

establish a budget

explore ways to increase your cash flow

conduct an interest rate checkup to see if your current loan rates are the best possible

Tuesday, February 23, 2010

To the joy of many homebuyers the First-Time Homebuyers Tax Rebate program was extended last November with a new deadline of June 30, 2010. But if you've been waiting for the spring crop of available houses, you could be waiting too long. The revisions to the program specify that homebuyers who want to get the rebate need to have a house under contract by April 30th. Closing papers must be filed by the June 30th deadline.

Okay, maybe it's still only February, but the last thing you want to do when buying a home is to rush to meet a deadline. Finding a home you'll be happy with takes time. Getting a rebate on your purchase isn't something you should let slip by.

Now, let's review the requirements for the Rebate once more. Pay attention because even if you you didn't qualify for the first version of the program you may qualify for the extended version.

$8,000 for First-Time Buyers

Place a new or used home under a binding contract between Jan. 1, 2009 and April 30, 2010.

To be considered a First-Time Buyer you must not have owned a principal residence in the last three years.

Rebate value equals 10% of the purchased home value, up to $8,000.

Income limits for sales after November 6, 2009 are $125,000 if you are single, $225,000 for couples filing jointly. If you earn more, the rebate amount is reduced. If you earn $145,000 (single) or $245,000 (joint) you won't get a rebate at all. If you earn something between these amounts your rebate will be reduced proportionately.

$6,500 for Repeat or Move-Up Buyers

You must have owned and lived in your home five of the past eight years.

Rebate is equal to 10% of purchased home's value up to $6,500.

The new purchase value cannot exceed $800,000

Same income limits as the First-Time Buyer program

Remember, this is a rebate program, not a loan. However, if you should sell the house or you do not use it as your primary residence within three years after purchase, you will be required to repay the money.

Tuesday, February 16, 2010

The Credit Card Reform Act that's been phasing in for practically ever is scheduled to firm on February 22. We've all heard dribbles and bits about the Act, but a survey by Consumer Federation of America and the Credit Union National Association found that most of us don't really know what it's all about.

You can also submit questions for the town hall through Twitter. Just be sure to include the hashtag #cardlaw in your Tweet.

In the meantime, here's a brief run-down of how the Act affects consumers:

• Consumers must be given 45 days' notice of any changes in the interest rates of future balances or in other key terms of a credit card account.

• Hikes in the interest rates of existing balances are generally prohibited. Exceptions: If a promotional rate expires, if the cardholder makes a late payment, or if the contracted rate was variable. That last one -- a variable interest rate -- is a key loophole that many credit card issuers have been exploiting by changing consumers to variable rate cards prior to Feb. 22.

• Consumers have the right to "opt out" of significant changes that might be imposed on their accounts. To do so, they merely have to close their accounts and pay off the existing balances within five years.

• Limitations are imposed on the issuance of credit cards to anyone under the age of 21.

• Customers who maintain monthly balances must be told how long it will take to pay off that balance if they make only the minimum monthly payments.